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Comparative Advertising - a Deadly Marketing Tactic in the Competition

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Comparative Advertising - a Deadly Marketing Tactic in the Competition Phuong Phung (k1501425) Comparative Advertising - a deadly marketing tactic in the competition Case study: Advertising war between Nestle Milo versus Ovaltine Vietnam Thesis Winter 2019 School of Business and Culture International Business 2 SEINÄJOKI UNIVERSITY OF APPLIED SCIENCES Thesis abstract Faculty: School of Business and Culture Degree Programme: Bachelor’s degree in Business Administration Specialisation: International Business Author(s): Phuong Phung Title of thesis: Comparative Advertising - a deadly marketing tactic in the competition Supervisor(s): Miia Koski Year: 2019 Number of pages: 62 Number of appendices: 5 The thesis aims to study comparative advertising in a brand war. For further inves- tigation, the dissertation addresses two prime questions. The first one is about the impacts of comparative advertising on brand and consumers. Based on the first question, the second one is the explanation of why it is called “a deadly marketing weapon in the competition”. The theoretical framework begins with the definition and the historical background of comparative advertising. Then, the legal system used to manage the use of it are presented. The pros and cons of comparative advertising are also listed in this part. The Hierarchy of Effect Models in advertising is described in the next chapter. It is the frame of reference used to measure the influences of comparative advertising on consumer attitudes and behaviours. The empirical part comprises the survey as well as the Milo and Ovaltine case study. Data collated from these sources provide the practical knowledge which is compat- ible with the theories above. In conclusion, all questions are answered transparently. Comparative advertising is more impactful than non-comparative advertising on affecting consumers and brands. It could be an ideal strategy to promote product and brand images if com- panies implement it correctly by keeping it lawful, giving accurate information and using a positive voice tone. Keywords: advertising, marketing, comparative advertising, marketing war, con- sumers perception, Milo, Ovaltine, Vietnam 3 TABLE OF CONTENTS Thesis abstract .................................................................................... 2 TABLE OF CONTENTS ...................................................................... 3 Tables, Figures and Pictures ............................................................... 5 Terms and Abbreviations ..................................................................... 7 Special Symbols .................................................................................. 8 1 INTRODUCTION ............................................................................ 9 1.1 Background ................................................................................................. 9 1.2 Research Objectives ................................................................................. 10 1.3 Thesis Structure ........................................................................................ 10 2 THEORETICAL FRAMEWORK .................................................... 12 2.1 Definition of comparative advertising ........................................................ 12 2.2 Historical background of comparative advertising ..................................... 13 2.2.1 History of comparative advertising .................................................. 13 2.2.2 Global practices .............................................................................. 14 2.3 The legal issue .......................................................................................... 16 2.3.1 The EU regulations ......................................................................... 17 2.3.2 The US regulations ......................................................................... 17 2.3.3 The Vietnamese regulations ........................................................... 18 2.4 The pros and cons of comparative advertising for brands ......................... 19 2.4.1 The advantages of comparative advertising ................................... 19 2.4.2 The disadvantages of comparative advertising ............................... 21 3 THE INFLUENCE OF COMPARATIVE ADVERTISING ON CONSUMERS RESPONSE .......................................................... 24 3.1 Comparative advertising and Cognitive function ....................................... 25 3.1.1 Attention .......................................................................................... 25 3.1.2 Information process ........................................................................ 26 3.1.3 Awareness ...................................................................................... 27 3.1.4 Credibility ........................................................................................ 27 3.2 Comparative advertising and Affective function ........................................ 28 3.2.1 Attitude towards the ads ................................................................. 28 4 3.2.2 Attitude towards the brand .............................................................. 29 3.3 Comparative advertising and Conative function ........................................ 29 4 RESEARCH METHODOLOGY ..................................................... 31 4.1 Quantitative research method ................................................................... 33 4.2 Case study ................................................................................................ 33 5 SURVEY RESULTS AND FINDINGS FROM CASE STUDY ........ 35 5.1 Survey results ........................................................................................... 35 5.1.1 Demographic section ...................................................................... 35 5.1.2 Consumers attitude ......................................................................... 38 5.2 Findings from the case study .................................................................... 48 5.2.1 Case study description.................................................................... 48 5.2.2 The result ........................................................................................ 51 6 CONCLUSION AND RECOMMENDATION .................................. 53 6.1 Summary of the hypothesis ....................................................................... 53 6.2 Summary of empirical part ........................................................................ 54 6.3 Conclusion and recommendation .............................................................. 55 BIBLIOGRAPHY ................................................................................ 57 APPENDICES ................................................................................... 62 5 Tables, Figures and Pictures Table 1. Historical timeline of comparative advertising. ........................................ 14 Figure 1. Structure of the thesis ............................................................................ 11 Figure 2. Reasons to Use Comparative Advertising (Barry, E.T 1993, 22) .......... 20 Figure 3. Reasons to Not Use Comparative Advertising (Barry, E.T 1993, 23) .... 22 Figure 4. Hierarchy of Effect Models (Grewal et al. 1997, 2) ................................ 24 Figure 5. Research process in flow chart (Kothari 2004, 11) ................................ 31 Figure 6. Respondents by Gender ........................................................................ 35 Figure 7. Respondents by Age.............................................................................. 36 Figure 8. The number of daily ads watched by respondents ................................. 37 Figure 9. What do respondents seek out in an advert ........................................... 38 Figure 10. Consumers attitudes on comparative advertising scale ....................... 39 Figure 11. Comparative advertising is a good way for brands to publish and promote their products ........................................................................................................ 40 Figure 12. Comparative advertising leads to “clearer brand image” than non- comparative advertising ........................................................................................ 40 Figure 13. Comparative advertising makes brands more memorable than non- comparative advertising ........................................................................................ 41 Figure 14. Comparative advertising makes brands more reliable than non- comparative advertising ........................................................................................ 42 Figure 15. Comparative advertising makes brands more interactive than non- comparative advertising ........................................................................................ 42 6 Figure 16. Comparative advertising is unethical ................................................... 43 Figure 17. Comparative advertising is illegal ........................................................ 43 Figure 18. Information about products/ services given in comparison advertisement is believable .......................................................................................................... 44 Figure 19. Consumers benefit from comparative advertising ................................ 45 Figure 20. Respondents votes for the impacts of comparative advertising on consumers perception, purchase intention and brand preference ........................ 45 Figure 21. The effectiveness of comparative
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